Hyundai to file draft papers for India's biggest IPO

India’s second-largest carmaker by volume, Hyundai Motor India Ltd is set to file a draft red herring prospectus (DRHP) with market regulator Securities and Exchange Board of India (SEBI) for its $2.5-3-billion initial public offering (IPO).

This will be India’s largest IPO after state-owned insurer Life Insurance Corporation raised ₹20,557 crore in the country’s biggest-ever IPO in 2022 when the government offloaded a 3.5% stake in the company.

The IPO will see Hyundai Motor India’s South Korean parent dilute its stake. This comes after Hyundai Motor Group's executive chair Euisun Chung visited India last month to review the automaker’s future strategy.

Hyundai Motor India is targeting a valuation of $18 billion to $20 billion. The carmaker has hired investment banks such as Kotak Mahindra, Citibank, Morgan Stanley, JP Morgan, and HSBC for its IPO.

After the filing of DRHP, SEBI is expected to take a few weeks before it gives its go-ahead.

Hyundai will be the first IPO by a carmaker in India since Maruti Suzuki India Limited’s (MSIL) listing in 2003.

India is Hyundai’s third-largest market followed by the U.S. and South Korea. In 2023, Hyundai Motor India's contribution to Hyundai Motors' global volume stood at 18% as against 14.5-15% four years back.

Hyundai operates with a network of 1,372 sales points and 1,557 service points across India, as on May 31, 2024. Its model line-up consists of cars across different customer segments, including Grand i10 Nios, i20, Aura, Exter, Venue, Verna, Creta, Alcazar, Tucson and the all-electric SUV IONIQ 5.

In order to bolster its presence in India, the South Korean automaker completed the acquisition of General Motors’ Talegaon plant in Maharashtra earlier this year. The Talegaon plant is touted to be a catalyst in helping Hyundai India achieve the one million annual production capacity milestone. Talegaon plant has an existing annual production capacity of 1,30,000 units. Hyundai has committed to invest ₹6,000 crore in Maharashtra. The carmaker intends to make phased investments for the purpose of upgrading the existing infrastructure and manufacturing equipment at the plant.

Hyundai Motor India's existing manufacturing plant is near Chennai. It forms a critical part of Hyundai’s global export hub with exports spanning across Africa, the Middle East, and other countries including Bangladesh, Nepal, Bhutan and Sri Lanka.

The South Korean automaker registered total sales of 63,551 units in May. This includes domestic sales of 49,151 units and exports of 14,400 units. Domestic sales witnessed a marginal growth of 1.1% last month.

“We have maintained a healthy total sales volume in May 2024, despite a week-long routine bi-annual maintenance shutdown at our Sriperumbudur factory. SUVs continue to be a growth driver for HMIL, accounting for more than 67% of domestic sales last month. Our rural penetration stood at a healthy 20.1% in May,” said Tarun Garg, COO, Hyundai Motor India.